Irish Life & Permanent has received a thumping good review - albeit from its own broker - following its interim results which saw after-tax profits down, but operating profits up by 19 per cent to €133.9 million (£105.4 million).
Its broker Davy says that the outlook for the enlarged group looks very positive and "indeed it stands out in an undervalued Irish financial sector". Davy has revised upwards its forecasts for 1999.
Originally it forecast that the operating profit would be €234 million (£184 million), but this has been increased by 6 per cent to €270 million (£212.6 million). The bullish forecast is made despite the recent outbreak of mortgage rate reductions.
"Debut results from the merged group [the first since Irish Life and Irish Permanent merged operations] were comfortably ahead of our expectations and our revised forecasts for 1999 and 2000 are somewhat ahead of our earlier estimates, even building in a sizeable mortgage margin hit next year," it says.
Davy says that in common with Irish financial stocks in general, IL&P's price has had a "particularly torrid time" of late, as the market weighs up the consequences of the current mortgage "price war".
Davy says that at the current price (which at the time of writing was 1,008 cents) the shares are trading at an 18 per cent discount - using a sum of parts approach (SOP). This method values the separate businesses using appropriate sector valuation bases.
